Goodman Group (ASX: GMG) shares have traditionally been strong performers for investors.
But over the last 12 months, that hasn't been the case, with the industrial property company's shares down over 8%.
Does this make its shares undervalued? Let's see what Bell Potter is saying about Goodman following its third-quarter update.
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What is the broker saying?
Bell Potter was pleased with Goodman's update. However, it believes investors will need to be patient when it comes to the company's data centre operations.
Speaking about its update, the broker said:
GMG released its 3Q26 update with FY26 operating EPS growth of +9% y/y reiterated (BPe +9%, VA consensus +10%), "on track to deliver at least this level of performance."
Powerbank – The data centre powerbank has increased by 7% to 6.4GW with additional contributions driven by Australia / New Zealand (+0.5GW to 2.1GW). […] The market continues to await leasing momentum, with Vernon (LAX01) now in the hands of Databank post recent JV, as major customer signings across the market have been announced by peers. GMG has a long and successful track record as a customer first business, and we think this reflects a combination of status of GMG projects, as well as extension and complexity of leasing and development timeliness. GMG and market anecdotes highlight the strength of current demand and in-place rental growth if and where supply is available.
Are Goodman shares undervalued?
According to the note, the broker has retained its buy rating on Goodman shares with a trimmed price target of $35.50 (from $36.45).
Based on its current share price of $30.01, this implies potential upside of 18% for investors over the next 12 months.
Commenting on its buy thesis, the broker highlights that the company's shares are trading at a discount to medium-term average multiples. This could potentially make now a good time to pick up shares. Bell Potter concludes:
No change to our Buy recommendation. While we do have some question marks vis-a-vis leasing progress, extension of timelines and associated impact on earnings mix and booking of profits, the moat around the haves and have nots for scaled data centre players appears to be widening, recognising the scale and complexity of execution. Post pull back, GMG trades at a discount to its 5yr PE vs. ASX200 avg (28% prem. vs. 52% 5yr avg) with forward customer signings a key driver.
